1. General Insurance

2. The Great Fire of London.
Sunday, 2nd Sept. to Wednesday, 5th Sept 1666
Consumed
13,200 houses,
87 churches,
most of the City authority buildings
gutted the medieval City of London inside the old Roman City Wall
Destroyed the homes of 70,000 out of 80,000 of the city’s inhabitants

3. What is Fire Insurance ?
“The business of effecting, otherwise than incidentally to some other class of business, contracts of insurance against loss by or incidental to fire, or other occurrence customarily included among risks insured against the fire insurance policies.” – Insurance Act, 1938.
A fire insurance is a contract under which the insurer in return for a consideration (premium) agrees to indemnify the insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period.
The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy.

4. Fire
'Fire' means the production of light and heat by combustion or burning.
There is said to be a fire within the meaning of fire insurance when:
There is actual ignition.
The fire is purely accidental or fortuitous in origin so far as the insured is concerned.
There must be something on fire which ought not to be on fire.

5. Actual ignition No Claim without a Flame.
The fire must result from actual ignition and the resulting loss must be proximately caused by such ignition.
The damage should be occasioned by fire.
Loss or damage caused by excessive fire heat cannot be included in ‘loss or damage fire’.
Loss or damage must be either by ignition of article or property or premises or part thereof.
If lightning causes ignition, there is actual ignition.
If water causes damage when used to put out fire, Fire, and not water is the villain.

6. Accidental or fortuitous
Fire must be accidental
or magnitude of the fire must be accidental – eg. Cooking stove.
The cause of fire is immaterial unless it as the deliberate act of the insured.
It is immaterial whether the fire comes to the insured property or the insured property comes to the fire.

7. Life assurance V Fire Insurance
Fire/ Marine 1.
Contract for liquidated sum.
A contract of indemnity. 2.
Event is certain
Event is uncertain 3.
Longer period
Short period – one year 4.
Insurable interest at the time of contract
Marine: at the time of claim.
Fire: at time of contract and claim 5.
Insurable interest cannot be measured in terms of money
Can be measured in term of money. 6.
Facility of Surrender value.
No such surrender 7.
Nomination facility available
Only assignment is possible. 8.
Loan against the Policy
No such facility. 9.
Premium paid in installments.
Payment in lump sum
10.
Premium according to age.
Premium according to risk.
11.
Life is the subject mater.
Property or other assets.

8. Types of Fire Insurance
Specific Policy
Valued Policy
Average Policy
Floating policy
Reinstatement Policy
Consequential loss Policy
Comprehensive policy
A Blanket policy

9. Specific Policy
The insurer undertakes to make good the loss to the insured up to the amount specified in the policy.
The value of property is not relevant in determining the amount of indemnity in case of a specific policy.
Example:
A building worth Rs.2,00,000 is insured against fire for Rs. 1,00,000.
If the damage to the property is Rs.75,000 the insurer will get the full compensation.
If damage is Rs.2,00,000, Rs. 1,00,000 is payable.

10. Valued Policy
The value declared in the policy is payable by the insured in the event of a total loss irrespective of the actual value of loss.
The policy violates the principle of indemnity.
The insurer has to pay a specified amount quite independent of the market or actual value of the property at the time of loss.
So such a policy is very rarely issued.
It may be issued only on artistic work, antiques and similar rare articles whose value cannot be determined easily.

11. Sum Insured * Actual Loss
Average Policy
Under a fire insurance policy containing the ‘average clause’ the insured is liable for such proportion of the loss as the value of the uncovered property bears to the whole property.
This principle applies if the property is underinsured.
Example:
House insured for Rs. 4,00,000 though its actual value is Rs.
6,00,000.
Part of the house is damaged in fire and the insured suffers a loss of Rs. 3,00,000
The amount of compensation to be paid by the insurer is Rs. 2,00,000
Claim Payable =
Sum Insured * Actual Loss =
400000*300000
=200000
Value of the Property
6000

12. Floating policy
Used for covering fluctuating stocks of goods held in different locations.
With every transaction of sale or purchase, the quantities of goods kept at different places fluctuate.
It is difficult for the owner to take a policy for a specific amount.
The best way is to take out a floating policy for all the stocks of goods.

13. Reinstatement Policy Also called ‘New for Old’ Policy
Such policies avoid conflict of indemnity.
The insurer has the right to reinstate or replenish the property destroyed instead of paying compensation to the insured in cash.
It may be granted on building, machinery, furniture, fixture and fittings only.
Restoration of damaged portion of the property to a condition substantially the same, but not better or more extensive than its condition, at the time of its renovation

14. Consequential loss Policy
Provides for loss of tangible and intangible properties.
The insured may suffer a greater financial loss on account of dislocation of business caused by fire
.e.g. close down business after fire for repair, to meet fixed expenses such as rent, salaries, taxes and other expenses as usual.
Such considerable loss to the insured is not covered by the ordinary fire policy.
In order to cover such loss by fire, the ‘Consequential Loss Policy’ has been introduced.
The loss so suffered is separately calculated from the loss actually suffered.

15. Comprehensive policy It is also known as ‘all insurance policy’.
Covers the risks of the fire arising out of any cause that is civil commotion, lightening, riots, thefts, labor disturbances and strikes etc.
‘Comprehensive’ does not mean that every type of risk is covered.
There may be exclusions and limitations.

16. Other types Blanket policy : Declaration policy:
to cover all the fixed and current assets of an enterprise by one insurance.
Declaration policy:
Trader takes out a policy for the maximum value of stock which may be expected to hold during the year.
At a fixed date each month, the insured has to make a declaration
regarding the actual value of stock at risk on that date.
On the basis of such declaration, the average amount of stock at risk in the year is calculated and this amount becomes the sum assured.
Sprinklers leakage policy.
It covers the loss arising out of water
leakage from sprinklers which are setup to extinguish fire.

17. Add-on Covers Forest Fire Spontaneous combustion
Deterioration of Stocks in cold storage
Earthquake (Fire & Shock)
Terrorism
Impact damage due to Insured’s own Rail/ Road Vehicles, fork Lifts, Cranes, stackers and the like and articles dropped there from

18. Rights of the Insurer
Right to avoid the policy- in case of willful act and misrepresentation.
Right of entry control over the property- on the happening of the event to take the possession of the property.
Right of reinstatement- replace the asset
Right of subrogation - entitled to all rights and remedies available to the insured after indemnifying
Right to contribution- when more than one policies are taken by the insured, loss will be shared with other insurers.
Right to salvage - assured to hand over the salvage to the insurance company in case of loss to the property insured.

19. Implied Conditions Existence of Property when policy is effected
Insured Property must be property damaged
Insurable interest from the time of commencement of risk and up to the completion of the contract.
Observe good faith in disclosure, efforts to prevent and extinguish the fire with reasonable care.
The subject matter of insurance should be described in the policy as to identify it clearly.
Express conditions are described in the policy.

20. Claims Notice in writing to the insurer.
Evidence regarding loss by fire.
Filing the prescribed form with all details
Inspection of loss by Insurer
Double insurance – contribution
More than one fire, total pay out will not exceed the insured amount.
Waiver is the voluntary relinquishment of a known right. Insurer my pay as a waiver.

21. Rate Fixation Rate calculation is made in following manner;
Base rate for the class of property.
Reduction in rates based on exclusion and add on covers.
Extra tariff for hazardous assets.
Discount is allowed for claim experience.
Further discount is allowed for betterment of risk.
Followings are to be considered on fixation of premium
Type of insured
Location of property
Storage facility and other infrastructure
Additional premium on ‘add-on covers’ and discount on ‘exclusion’.

22. Rate Fixation Three steps: Classification Discrimination
Fixing or schedule rating.

23. Classification
The risks are classified into various classes according to factors affecting fire risk.
Construction of Structure
Occupancy
Nature of flooring
Height
Floor and Wall Opening
Exposure
Lighting heating and power
Place or situation
Protection
Time of loss

24. Discrimination
The differentiation of the rates for individual risks in a particular class.
Risks are differentiated from each other according to the merits and demerits of the individual risk.
Equitable basis of ratting.

25. Schedule Rating
An empirical standard for the measurement of relative quantity of fire hazard.
It is based on the theory that the aggregate fire hazard of any risk is capable of ultimate analysis into its component factors to each of which could be assigned an appropriate charge
A standard or average premium is determined as a base for calculating the premium.
The rate arrived at the is the net premium, which is just sufficient to meet all the losses in that particular risk.
This is loaded with expenses to arrive at the gross premium or office premium
Average Fire Rate R =
Total Loss
*100
Total Values of insurance

26. Tariff Rating
Fire insurance business is governed by the tariffs formulated by the Tariff Advisory committee
TAC is a statutory body established under the provisions of The Insurance (Amendment ) Act 1968.
TAC control and regulate the rates, advantages, terms and conditions offered in respect of general insurance
Tariffs provide rates for almost all classes of risk
also provide rules and regulations for the business and standard form of wordings for the contract.
Regional committees at Delhi, Calcutta Chennai, Mumbai.
Each region has its own Tarff applicable to risks in in its territorial jurisdiction.
Tariffs are determined based on principles of rate fixation.

27. Documents
Proposal Form- contains details of proposer, type of coverage, details of subject matter, sum insured, insured declaration/authentication, risk inspection report.
Cover note- is issued pending issue of policy covers proposer’s detail, sum insured, details of risk covered, premium detail, date of issue and validity, date of commencement and expiry of cover, authentication, warranties and clauses.
Policy document- must follow the format prescribed by the tariff. Must contain all the information as contained in the cover note, and endorsement and alteration made to the policy.

28. MARINE INSURANCE

29. Marine Insurance - Defined
A contract of Marine insurance is a contract whereby the Insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed , against marine losses, that is to say, the losses incident to marine adventure.
Section 2(13)A of The Insurance Act 1938:
“Marine Insurance business” means the business of effecting contracts of insurance upon vessels of any description including cargoes freights and other interest which may be legally insured in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water or both and whether or not including warehouse risks or similar risks in addition or as incidental to such transit and includes any other risks customarily included among the risks insured against in marine insurance polices.

30. Marine Vs Fire Insurance1.
Freely Transferable.
Only with the consent of insurer. 2.
Insurance can be for a subject matter ‘ lost or not lost ‘ : both the parties are ignorant of the safety or otherwise of the goods.
Insurable interest should be available at the time of contract also. 3.
Short period or for a voyage
One year 4.
Insurable interest at time of loss.
Also at time of contract 5.
A cretin Profit margin is also allowed in Claim.
Claim for actual loss or insured amount whichever is low. 6.
Standard form of Policy prescribed by Law.
No standard form prescribed. 7.
Moral responsibility of the cargo owner does not exist.
Moral responsibility of insurer is an important aspect.

31. Types of Marine Insurance
Two broad categories - ocean marine insurance and Inland marine insurance.
Ocean marine insurance is a form of transportation insurance. It is classified into 4 categories:
Hull insurance
covers physical damage to the ship or vessel
Cargo insurance
covers the shipper of the goods if the goods are damaged or lost. Open cargo policy can be used for regular shipment. The open cargo policy has no expiration date and remains in force until it is cancelled.
Protection and Indemnity (P&I) Insurance
provides comprehensive liability insurance for property damage or bodily injury to third parties.
Freight Insurance
indemnifies the ship owner for the loss of earnings if the goods are damaged or lost and are not delivered.

32. Implied Warranties Seaworthiness of Ship. Legality of Venture
At the commencement of the voyage or at each stage of voyage.
Seaworthiness is relative term - suitability for the season, sea, etc.
suitability and adequacy of her equipment, adequacy and experience of the officers and crew.
Include cargo - worthiness
Legality of Venture
Eg. Trading with enemy, violating national laws, smuggling, ventures prohibited by law.
Non- deviation
No deviation and delay of voyage

33. Classes of Policies 1. Voyage Policy
insured against risk in respect of a particular voyage from a port of departure to the port of destination
covers the subject matter irrespective of the time factor.
not suitable for hull insurance as a ship usually does not operate over a particular route only.
The policy is used mostly in case of cargo insurance.
2. Time Policy
for specified period of time, usually not exceeding 12 months.
generally used in connection with the insurance of ship.
3. Mixed Policies
It is a mixture of voyage and time policies.
for a certain time period and for a certain voyage or voyages,
e.g., Kolkata to New York, for a period of one year.
generally issued to ships operating on particular routes.

34. Classes of Policies .. 4. Valued Policies
The value of the subject matter is agreed between the insurer and the insured at the time of taking the insurance. It includes
invoice price of goods
freight, insurance and other charges
ten to fifteen percent margin to cover expected profits.
5. Unvalued policy
the value of subject matter insured has to be ascertained wherever the subject matter is lost or damaged.
6. PPI Policies
Policy Proof of Interest
Honored by the insurer even in absence of insurable interest.
Issued on mutual understanding and is called honored polices.
Since this is not legally enforceable, it is called wagering policies.

35. Classes of Policies … 7. Floating Policy
A merchant who is a regular shipper of goods can take out a ‘floating policy’ to avoid botheration and waste of time involved in taking a new policy for every shipment..
It does not include the name of the ship and other details.
the insured takes a policy for a huge amount
The other details are required to be furnished through subsequent declarations.
The underwriter goes on recording the entries in the policy.
When the sum assured is exhausted, the policy is said to be “fully declared” or “run off”.
8. Block Policy
This policy covers other risks also in addition to marine risks.
A single policy known as block policy may be taken to cover all risks. E.g. when the goods are dispatched by rail or road transport for shipment, a single policy may cover all the risks from the point of origin to the point of destination.

36. Assignment
A marine insurance policy may be transferred by assignment unless the terms of the policy expressly prohibit the same.
The assignment may be made either by endorsement on the policy itself or on a separate document.
The insured need not give a notice or information to the insurer or underwriter about assignment.
In case of death of the insured, a marine policy is automatically assigned to his heirs.
At the time of assignment, the assignor must possess an insurable interest in the subject matter insured.
An insured who has parted with or lost interest in the subject matter insured can not make a valid assignment.
After the occurrence of the loss also, the policy can be assigned freely to any person. The assignor merely transfers his own right to claim to the assignee.

37. Marine Losses
A loss arising in a marine adventure due to perils of the sea is a marine loss. Marine loss are classified into - Total loss and Partial Loss.
Total Loss: implies that the subject matter insured is fully destroyed and is totally lost to its owner.
It can be Actual total loss or Constructive total loss.
Actual total loss
subject matter is completely destroyed or so damaged that it ceases to be a thing of the kind insured.
e.g. sinking of ship, complete destruction of cargo by fire, etc.
Constructive total loss
The ship or cargo insured is not completely destroyed but is so badly damaged that the cost of repair or recovery would be greater than the value of the property saved.

38. Marine Losses- Partial Loss
A partial loss occurs when the subject matter is partially destroyed or damaged. Partial loss can be general average or particular average.
General average
refers to the sacrifice made during extreme circumstances for the safety of the ship and the cargo. This loss has to be borne by all the parties who have an interest in the marine adventure.
e.g. A loss caused by Jettison must be shared by various parties.
Particular average
loss arising from damage accidentally caused by the perils insured against. Such a loss is borne by the underwriter who insured the object damaged. e.g. If a ship is damaged due to bad weather the loss incurred is a particular average loss

39. Insurable Interest
Insurable interest in the subject-matter insured must exist at the time of the loss. It need not exist when the insurance policy is taken.
Under marine insurance, the following persons are deemed to have insurable interest:
a) The owner of the ship.
b) The owner of the cargo.
c) A creditor who has the security of the ship or cargo.
d) The master and crew of the ship have insurable interest in respect of their wages.
e) In case of advance freight, the person advancing the freight has an insurable interest if such freight is not repayable in case of loss.

40. Policy Conditions
Conditions are inserted into policy in the form of clauses:
Hull clauses:
Institute time Clauses
Incorporated in Hull Policies
losses resulting from collision, standing, general average etc.
All risks policy may be issued or certain risks may be excluded from the policy by inserting suitable clauses
Cargo Clauses:
Institute Cargo clauses
Insurance of goods, nature, extent, and scope of the insurance
Additional marine perils are inserted through special clauses.
Freight Clauses
Institute Freight clauses
Loss of freight due to maritime perils which may be insured for a period or for a voyage.

41. Description of the Clauses
Assignment Clause
freely assignable and no notice is to be given to the underwriter.
But for hull insurance, consent of underwriter is essential
Lost or not lost
The merchant gets information of the shipment of his cargo very late after the sailing of the steamer and therefore, it is not known whether the subject matter was lost or not lost.
The insurer undertakes to indemnify the insured whether subject matter was lost or not before the issue of the policy.
At and from clause
Applicable for voyage policies insuring hull and freight.
Determines the time when the actual risk commences
Cover available while it is lying at the port of departure.
If the policy contains ‘from’ only instead of ‘at and from’ , the risk commences from the time of departure of the ship and not earlier.
Warehouse to warehouse clause
Risk commences form the specified place and continues to the specified place of destination named in the policy.
The risk of land, craft transport and transshipment are covered under a single marine policy.

42. Description .. Deviation, touch and stay cause
Any departure form the specified course of the voyage or a customary course (if not specified in the policy) amounts to deviation.
A deviation is different form the change of voyage.
In change of voyage, the agreed upon destination is changed – intention to change the voyage is sufficient to end the liability of the underwriter.
In deviation, there should be actual deviation. Once deviation has taken place, the risk ceases to attach for the rest of the voyage.
Deviating is excused if it is caused by:
It is caused by circumstances beyond the control of the master and his employer.
It is necessary to comply with an express or implied warranty.
It is necessary for the safety of the ship or subject matter insured.
For the purpose of saving human life or aiding a ship in distress where human life may be in danger.
Deviation caused by barratrous conduct of the master of the crew, if barratry be one of the perils insured against.

43. Description .. Inchmaree Clause
Named after a steamer called “Inchmaree’, in 1887, where claim was denied since the donkey pump of the steamer was damaged.
This clause provide indemnity to the insured for damage to the hull or machinery resulting from the negligence of the master or crew or from explosion or latent defects.
This clause is also inserted in cargo polices.
Running Down Clauses
Also called collision clause and is included in hull polices.
The amount of damage extends to include damage done by the vessel to other ship, her cargo and compensation for loss of employment in consequence of collision .
Only three fourth of the liability is met by the insurer and rest is to be borne by the owner of the ship.

44. Description .. Reinsurance clause Memorandum Clause
Sue and Labour Clause
Underwriters pay expenses in addition to the loss.
Limitations of Expenses in the above clause:
must be incurred for the benefit of the subject mater insured.
Must be reasonable
Must be incurred by the assured, his factors, his servants or assigns.
incurred to avert or minimise a loss form a peril covered by the policy.
Reinsurance clause
Reinsurer is liable only for claims for which the insurer is legally liable
Alteration in the original policy to be with consent of the reinsurer.
Memorandum Clause
Provide minimum limit to the underwriters liability regarding claims for particular average by exempting him from such claims.
Continuation clause
The vessel continue to be covered even after completion of voyage under the policy at a pro rata premium to her port of destination.

45. Marine cargo coverage Marine policy generally subject to:
ICC – A, ICC B, ICC C( For sea transits)
Inland Transit ( Rail/ Road)Clauses – A
Institute Cargo Clauses( Air Cargo)
Extensions are:
SRCC
Institute War clause,
FOB

46. Institute Cargo Clauses “C”
Covers the following :
Loss or damage to the subject- matter insured reasonably attributable to:
Fire or explosion
Vessel or craft being stranded, grounded, sunk or capsized
Overturning or derailment of land conveyance
Collision or contact of vessel / craft or conveyance with any external object other than water
Discharge of cargo at the port of distress ii. Loss / damage to the subject –matter insured caused by:
General Average sacrifice
Jettison
General Average contribution and Salvage charges incurred to avoid loss from any cause (s) except those excluded
Liability under “Both to Blame Collision” clause of contract of Affreightment

47. Institute Cargo Clause “B”
covers the aforesaid risks of ICC (C) and
Loss / damage reasonably attributable to earthquake, volcanic eruption or lightning;
Loss or damage caused by
Entry of sea, lake, or river water into vessel, craft, lift van or place of storage
total loss of any package lost overboard or dropped whilst loading into or unloading from vessel or craft
General Average contribution and Salvage charges incurred to avoid loss from any cause (s) except those excluded
Liability under “Both to Blame Collision” clause of contract of Affreightment

48. Institute Cargo Clause (A)
Covers the following risks
All Risks of loss / damage to the cargo insured except those specifically excluded.
General average and salvage charges incurred to avoid loss form any cause covered under the insurance.
Liability under “Both to Blame Collision” clause of contract

49. Exclusions Willful Misconduct of the Assured
Ordinary Leakage, wear & tear
Insufficiency of packing
Inherent vice
Delay - even if delay is caused by a peril insured
Insolvency or financial default of owner manager charterer etc
Arising from use of nuclear weapons
Malicious damage-only in ICC-B&C
Un-seaworthiness of vessel
This may be waived unless the assured or their servant is privy to such Un-seaworthiness or un cargo worthiness
War/capture seizure arrest/derelict mines
Caused by strikers/resulting from strikes/terrorist.

50. Return of Premium
The premium is refundable under the following circumstances:
By agreement in the policy
Improvement of the character of insurance eg. Change of ship to safer routes, first class liner, good packing etc
If claim does not arise.
Cancellation of policy due to change of ownership of the hull.
Mutual cancellation of the policy.
For reasons of equity
Non attachment of risk.
Undeclared balance in an open policy
Total failure of an apportionable part of the consideration
When assured had no insurable interest throughout the life of policy.
Insurer can cancel when there is unreasonable delay in commencing the voyage.
Over insurance.

51. What , if there is a Claim? Loss minimisation steps to be undertaken.
A Prompt Notice of Claim
If ship owner is also liable for any loss or damage, he or his agent is also entitle d to a written notice.
Following documents are required at the time of claim:
Policy or certificate of insurance.
Bill of Lading
Invoice of bill
Copy of Protest – certified before a counsel or notary public.
Certificate of survey
Account sale or bill of sale.
Letter of subrogation.
In case of total loss, notice of abandonment

52. EXPORT CREDIT INSURANCE

53. Export Credit Risk Exports Goods Services Credit
Extending supplier credit: DP, DA, OA
Risk
Possibility of non-payment of accounts receivables

54. Types of Export Credit Risks
Exchange
Transfer
Legal
Political
Export Credit Risk

55. Political Risk
Some countries may experience major political instability
defaults on payments
exchange transfer blockages
nationalization
confiscation of property
leading to…

56. Credit risk Credit Risk The risk of Insolvency Default Fraud
Unwillingness to accept the goods on the part of the buyer
Credit risk
All resulting in…..

57. Transfer Risk.. …arising from all/any of the above
Weakness in economy of Buyer's country, viz. low reserves, BOP problems
Failure of Buyer's Bank affecting payment of outstandings
Exchange or trade controls introduced in Buyer's country
…arising from all/any of the above

58. Transfer Risk
Weakness in economy of Buyer's country, viz. low reserves, BOP problems
Failure of Buyer's Bank affecting payment of outstandings
Exchange or trade controls introduced in Buyer's country

59. Legal Risk Differences in law can be expected in overseas countries
These may have an impact in such areas as:
import procedures
taxation
employment practices
currency dealings
property rights
the protection of intellectual property
agency/distributorship arrangements

60. Export Credit Insurance
Risks covered by export credit insurers:
Commercial Risk
Insolvency/ Bankruptcy
Breach of Contract
Payment Default
Refuse to take delivery of goods
Political Risk.

61. Role of ECGC
Providing credit insurance covers to exporters against loss in export of goods & services
Providing export credit guarantees to banks & FI’s to enable exporters obtain better facilities from them
Providing Overseas Investment Insurance to Exporters - Indian Entrepreneurs in Overseas Ventures (Equity/Loans)
Maturity Factoring

62. Standard Polices – Risks covered
COMMERCIAL RISKS
Insolvency of buyer/LC opening bank
Default of buyer
Repudiation by buyer
POLITICAL RISKS
War/civil war/revolutions
Import restrictions
Exchange transfer delay/embargo
Diversion of Voyage Risk

63. Country evaluation
Assessment and evaluation of political risks associated with countries for the purpose of premium calculation, determining types of cover and terms of cover
Country reviews are taken up on a regular basis for up/down grading
Country Underwriting involves assessment of a country’s ability and likelihood to honour its commitments undertaken both, as part of trade as well as sovereign debt
The country risk is evaluated on the basis of the politico-economic situation prevailing in a country

64. Country Classification
ECGC classifies the countries with the help of an objective scoring methodology
Under the rating system followed, the weighted averages of scores on economic risk rating, political risk rating, past experience of ECGC, trade relations with India and experience with other credit insurers are calculated to arrive at the Country Risk Indicator
While underwriting the country risk, ECGC places the country either in
Open Cover of
Restricted cover
The basis for deciding on the type of cover and terms of cover is a host of economic and political factors

65. Open Cover Countries Cover with No Restrictions
Cover is offered usually on normal terms and conditions i.e. 90% cover, 4 months waiting period for ascertainment of loss and settlement of claims, etc.
Currently ECGC places 195 countries under Open Cover

66. Restricted Cover Countries
Political and/or economic conditions are relatively deteriorating or have deteriorated
likelihood of payment delays or non-payment.
Category 1: Countries for which revolving limits are approved
cove valid 12 month)
ILCs opened or confirmed by banks listed in Banker’s almanac or by local banks whose reports are satisfactory. Cover will be 90%
Normal cover of 90% on DP/DA terms subject to satisfactory report on the buyer
20 countries under this category
Category 2: Countries where Specific Approval will be given on case to case basis on merits
Valid for six months
Normal waiting Period of 4 months
Only 7 countries - Afghanistan, Argentina, Cuba, East Timor, Iraq, North Korea, Somalia

67. Restricted Cover Countries
Options exercised to control risk in Restricted Cover countries:
Reduce percentage of cover
Increase waiting period for the settlement of claim
Provide cover against availability of government guarantee/confirmed ILCs
Payment in convertible currency
Fix country exposure limit
Fix transaction limit per exporter per buyer
Fix bank exposure limit

68. Schemes for Exporters Short Term Cover: Payment within 180 days
SCR or Standard Policy:
cover risks in respect of all shipments on short term credit by exporters with anticipated annual turnover of > Rs.50 lacs
Turnover Policy:
variation of SCR policy with additional discounts and incentives to exporters who pay a premium of not less than Rs. 10 lacs per year.
Small Exporters Policy
Similar to SCR Policy, but for exporters with anticipated annual turnover of Rs.50 lacs or less
Specific Shipment Policy (Short term)
To cover risks in respect of a specific shipment or shipments against a specific contract
Commercial & Political
Political Only
LC Commercial and Political

69. Schemes for Exporters.. Exports (Specific Buyer Policy)
To cover risks in respect of all shipment to one or a few buyers
Commercial & Political
Political Only
LC Commercial & Political
Exports of Services Policy
To cover the risks of insolvency and default and political risks for services rendered
Without Recourse Export maturity Factoring
Undertaking to pay the amount due for a shipment on the maturity of the credit period.

70. The Indian Health Scenario
Total Expenditure on health in India is nearly 6% of the entire GDP
Government spending is less than 25% against the average spending of % in other developing countries.
Indian health insurance industry stands at INR 5,125 Crores with only a small Section of the total population (around 2%) being covered so far.
CAGR of around 35 % (FY )
Health Insurance industry in India is one of the fastest growing segments. Health Insurance - potential to become a Rs crores industry by 2012.
No. of Elderly People in the Developing World will TRIPLE in 25yrs. (WHO)
In India, the no. of people above 60 yrs is about 8% today. The t no. expected to hit 21% by (Asia Insurance Review)

71. Market Size & Growth Rate

72. Health Insurance Plans
Private
Social
Community Based / Micro Insurance
offered by Commercial Organization
Government initiated
managed by Community / Groups

73. Challenges Increase in health care costs
High financial burden on the poor
Need for long term and nursing care for senior citizens
Increasing burden of new diseases and health risks
Due to under funding, preventive and primary care and public health functions are yet to meet their objectives.

74. Social / Government Schemes
CGHS Schemes for Government Employees
ESIS Schemes
Rashtriya Swasthya Bima Yojana (RSBY)
With participation of health insurer
Implemented in 11 states
Extended to other section of populace other than BPL
State Governments have also initiated several schemes where there is participation of Insurers to run the Scheme

75. RSBY launched by Ministry of Labour and Employment, GOI.
to provide health insurance for BPL families.
Beneficiaries entitled to hospitalization coverage for most of the diseases up to Rs. 30,000/-
Pre-existing conditions are covered. No age limit.
Coverage extends to five members of the family - the head of household, spouse and up to three dependents.
Beneficiaries need to pay only Rs. 30/- as registration fee
Central and State Government pays the premium.
Insurer selected on the basis of a competitive bidding.
Biometric smart card with fingerprints and photographs.
Card can be used in any RSBY empanelled hospital in India.
Can be split for individual members of migrant family.
Cashless benefit in hospitals

76. HEALTH INSURANCE The Individual Medishield Policy covers
Hospitalisation Expenses & Domiciliary Hospitalisation (treatment at home in case patient is not in condition to be moved to hospital) incurred for treatment of disease / injury sustained during policy period

77. COVERAGES
Hospitalization expenses including Room, Board, Nursing, Doctor’s fees, Cost of Medicines, Pathological Tests, etc.
Pre-existing disease after 3 continuous claim free Policy years with the same insurer.
Prosthetic Devices like Pacemaker, Artificial Limbs etc.
Transplants including Donor’s treatment and cost of organs

78. COVERAGES
Daily Allowance for defraying miscellaneous expenses for the duration of Hospitalization
Dental surgery and treatment following an accident
Pre-Hospitalization and Post Hospitalization expenses including authorized home nursing for 60 days each.
Health check up after every block of 4 claim free years.
Ambulance service expenses

79. IMPORTANT POINTS
Hospitalization should be for a minimum period of 24 hours except for specific treatments such as eye surgery, lithotripsy, tonsillectomy etc.
There is provision for Cumulative Bonus whereby Basic Sum Insured gets enhanced by 5% each year on renewal (maximum 50%) subject to no claims being lodged under the Policy.
Family Discount is available for insuring two or more family members under the Policy.

80. IMPORTANT POINTS
Section 80 D benefit under Income Tax Act is available on Medishield premium paid by cheque for self and/or family (consisting of self, spouse, dependent children and dependent parents)
There is a sub-limit under the Policy for Domiciliary Hospitalization where expenses of treatment at home are reimbursed under specified conditions.
Limits are also specified under the Policy for daily Room/ICU/ITU rents, Ambulance Charges and Daily Allowance during Hospitalization

81. GROUP MEDICLAIM INSURANCE
THE COVER IS SAME AS IN INDIVIDUAL MEDICLAIM POLICY. CUMULATIVE BONUS IS NOT AVAILABLE AND MATERNITY COVER CAN BE GRANTED AT EXTRA PREMIUM.

82. OTHER HEALTH POLICIES
CANCER POLICY (CPAA): CAN BE GRANTED TO THE MEMBERS OF CANCER PATIENTS AID ASSOCIATION
CRITICAL ILLNESS INSURANCE POLICY IS ALSO AVAILABEL WHICH PAY ONLY IF SOME CRITICAL ILLNESS IS FOUND.
OVERSEAS MEDICLAIM INSURANCE: PAYS MEDICAL EXPENSES IN RESPECT OF ILLNESS AND INJURY BY INDIAN RESIDENTS DURING THERE OVERSEAS TRIPS.
EMPLOYMENT AND STUDY POLICIES HAS BEEN DESIGNED FOR INDIAN CITIZEN TEMPORARILY POSTED ABROAD AS STUDENT FOR PERSUING STUDIES.

83. PERSONAL ACCIDENT INSURANCE

84. PERSONAL ACCIDENT INSURANCE
What is covered
Injuries caused by an accident
Permanent partial/total disability due to accident
Temporary total disablement

85. How much is the compensation
Death – 100%of Capital Sum Insured (CSI)
Loss of
Sight of both eyes
Two limbs % of CSI
One limb and one eye
Sight of one eye/ one limb
Hearing in both ears/speech
Permanent total disablement – 100% of CSI
Other permanent disablement – as assessed by a Doctor
Temporary total disablement – 1% of CSI per week subject to a maximum of Rs. 6000/-

86. CUMULATIVE BONUS
THE SUM INSURED WILL INCREASE BY 5% ON EVERY RENEWAL PROVIDED THE POLICY IS RENEWED WITHIN 30 DAYS OF EXPIRY . MAX ACCUMULATION IS 50 %

87. SPECIAL FEATURES COVER IS ON WORLDWIDE BASIS
PREMIUM IS BASED ON THE OCCUPATION OF THE PERSON.
AGE LIMIT IS 5YEARS TO 70 YEARS
FAMILY PACKAGE IS ALSO AVAILABLE WITH DISCOUNTED RATES
GROUP POLICY CAN ALSO BE ISSUED FOR AN EXISTING GROUP.

88. RATING
RATING IS BASED ON OCCUPATION OF THE PERSON. SO THE OCCUPATIONS ARE CLASSIFIED IN THREE RISK GROUP ACCORDING TO DEGREE OF HAZARD
RISK GROUP-I: DOCTORS, LAWYERS, ARCHITECTS,TEACHERS,BANKERS ETC.
RISK GROUP-II: BUILDERS, CONTRACTORS, ENGINEERS ETC
RISK GROUP-III: WORKERS EMPLOYED IN UNDERGROUND MINES, EXPLOSIVE INDUSTRY JOKKIES, CIRCUS EMPLOYEES ETC.

89. LIABILITY INSURANCE

90. LIABILITY INSURANCE
The Liability Policies cover Insured’s legal liability to pay compensation to third parties for
death, injury or property damage claims arising out of accidents in connection with insured’s business
financial loss claims arising out of errors and omissions caused in Insured’s professional or official activities

91. VARIOUS TYPE OF POLICIES AVAILABLE
COMPULSORY PUBLIC LIABILITY:
An Act Policy providing immediate relief to persons affected by accidents occurring at applicable units.
No fault Liability Cover
Compulsory for all units handling hazardous substances with threshold limits defined in the act.

92. COMPULSORY PUBLIC LIABILITY
Fatal accident Rs 25,000/- per person.
Permanent disability Rs 25,000/- per person
Permanent partial disability on basis of percentage of disability
Temporary partial disability fixed monthly relief of Rs 1000 per month upto max of 3 months

93. COMPULSORY PUBLIC LIABILITY
Actual medical expense up to Rs 12,500/-
Damage to property Rs 6000/-
Rate of premium is based on limit of indemnity and turnover.
Every insurer has to pay the environment relief fund an amount equivalent the premium received by the insurer.

94. PRODUCT LIABILITY Definition:
Any tangible property (after it has left the custody or control of the Insured) which has been designed, manufactured, sold,
supplied or serviced by the insured.

95. LIABILITIES COVERED
Policies shall cover all sums which the insured shall become legally liable to pay as damages in consequence of
accidental death/ bodily injury or disease to Third parties
Loss of or damage to Third Party property arising out of any defect in the products manufactured and covered under the policy after such products have left the Insured’s premises

96. RATING
The rates of premium depends on the risk group, limit of indemnity and ratio of indemnity AOA to AOY. Exports can be covered as extension of the policy or a separate policy can also be issued

97. Professional indemnity
Policies are designed to provide insurance protection to the professionals against the legal liability to pay damages arising out of negligence in the performance of their professional duties. E.g. doctors, lawyers, architects

98. DIRECTORS & OFFICER’S LIABILITY POLICY
Policy is designed for directors & officers who hold position of trust and responsibility and may become liable to pay damages to shareholders, employees and creditors etc. for wrongful acts committed by them. The policy provides protection against the civil liability.

99. ENGINEERING INSURANCE

100. ENGINEERING INSURANCE
Contractors all risk
Erection all risk
Marine cum erection
Machinery breakdown
Boilers & pressure plant
Machinery loss of profits
Advance loss of profits
Electronic equipment policy
Deterioration of stocks policy

101. CONTRACTOR ALL RISK
THE POLICY IS DESIGNED TO PROTECT THE INTEREST OF CONTRACTOS AND PRONCIPLES IN RESPECT OF CIVIL ENGINEERING PRODUCTS. E.G BUILDING, BRIDGES, TUNNELS ETC

102. ERECTION ALL RISK
POLICY IS DESIGNED TO COVER RISKS INVOLVED WITH ERECTION OF ELECTRICAL PLANT AND MACHINERY OR EQUIPMENT INVOLVING NO OR VERY LESS CIVIL WORK.

103. MARINE CUM ERECTION
MARINE CUM ERECTION COVER POLICY STARTS FROM THE MOVEMENT THE EQUIPMENT LEAVES THE MANUFACTURERS WAREHOUSE WITHIN THE COUNTRY OR OVERSEAS AND CONTINUES DURING THE VOYAGE AND THERE AFTER DURING ERECTION, TESTING AND COMMISSIONING.

104. MACHINERY BREAKDOWN
POLICY COVERS ELECTRICALS AND MACHANICAL EQUIPMENTS AGAINST UNFORSEEN AND SUDDEN PHYSICAL DAMAGES BY ANY CAUSE

105. BOILER PRESSURE PLANT
POLICY COVERS THE BOILERS AND PRESSURE VESSELS AGAINST DAMAGE TO THE BOILER AND SURROUNDING POLICY OF THE ASSURED INCL THIRD PARTY LIABILITY. FIRE RISK IS EXCLUDED

106. MACHINERY LOSS OF PROFIT
POLICY IS DESIGNED TO REDUCE THE LOSSES OF THE INSURED INCURRED BECAUSE OF INERRUPTION OF BUSINESSES DUE TO MACHINERY BREAKDOWN. POLICY CAN ONLY BE ISSUED IN CONJUCTION WITH MACHINERY BREAKDOWN.

107. ADVANCE LOSS OF PROFIT
ALSO KNOWN AS DELAY IN START UP POLICY AND COVERS FINANCIAL CONSEQUENCES OF A PROJECT BEING DELAYED BECAUSE OF ACCIDENTAL DAMAGE TO THE PROJECT MATERIAL.

108. DETERIORATION OF STOCKS
COVERS THE RISK OF DETERIORATION OF STOCK FOLLOWING OF BREAKDOWN OF REFRIGERATION PLANT AND MACHINERY.

109. ELECTRONIC EQUIPMENT POLICY
THE POLICY COVERS 3 SECTIONS:
SECTION-I: COVER APPLIES TO UNFORSEEN AND SUDDEN PHYSICAL LOSS RESULTING IN REPAIR OR REPLACEMENT OF EQUIPMENT
SECTION-II: EXTERNAL DATA MEDIA COVER
SECTION-III: INCREASED COST OF WORKING